Doom for health insurers?

I wanted to do a very quick update on my article of two weeks ago when I talked about the health insurance industry.

This new article in FierceHealthPayer newsletter even more strongly reiterates the points made in that earlier article. Professor Jeffrey Pfeffer of Stanford University predicts “doom” for the health insurance industry. He believes that industry after industry from travel to publishing to finance have removed the intermediaries or “middlemen”. He thinks the health industry is on its way toward removing third-party payers—the middlemen—because they are so bloated and costly.

If the traditional business model for health insurers is following the dinosaurs, what’s the alternative? Pfeffer pointed to Kaiser Permanente, a healthcare provider that combines care delivery and insurance under one roof without a separate insurance middleman. This model saves money and lowers rates, Pfeffer wrote. As cost containment pressures build and more healthcare systems embrace “Kaiser-fication,” those who rely on intermediaries will find themselves at a competitive disadvantage, Pfeffer argued.

What is your take on this? Is it good for the healthcare industry to move away from third-party payers like insurance carriers? Where would behavioral healthcare providers wind up in such a change? How does the private practitioner continue to function? What happens to CMHCs?

Please share your comments below.

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